July 25, 2025

The Hidden Champions of the Climate Transition

 

Redefining Strategic Value in the Climate Economy

Small and medium-sized industrial companies may not attract much public attention, but they often play a pivotal role in accelerating the climate transition to a low-carbon economy. These firms manufacture essential components, resolve persistent bottlenecks, or deliver specialized services that keep complex value chains running smoothly – both upstream and downstream.

At Vidia Equity, we refer to this as a company’s quality of contribution to describe how relevant and impactful its role is within a climate solution and its broader value chain. High-quality contributors typically provide system-critical or performance-defining products and services in sectors where quality, compliance, customization, and reliability are non-negotiable. Without these companies, climate technologies would scale more slowly, or their performance would falter.

Over the past few years, we have identified three key ways, in which small and mid-sized industrial firms drive major climate impact:

1. Building Local Strongholds for Solution Deployment

Many proven climate solutions – such as heat pumps, solar PV systems, circular waste management systems, and energy efficient building retrofits – depend on localized expertise and deployment capacity. The companies that lead in these local markets often succeed by accruing deep technical skills, cultivating long-term customer relationships, and building trusted brands. They invest in capital-intensive assets, such as fleet logistics or specialized equipment, while maintaining a highly trained workforce. Their deep regional roots and strong reputations make them difficult to replace or commoditize.

2. Addressing Bottlenecks That Hold Back Entire Systems

Every material-based system – from global supply chains to national energy infrastructure – may face structural constraints and critical choke points. Lingering shortages of key components, such as rare earth minerals, semiconductors, or grid transformers can limit the pace of the energy transition. Similar gaps exist in skilled labor and specialized technical service capacity. Small and mid-sized firms, which tend to be more agile than large incumbents, are uniquely positioned to address these bottlenecks. In doing so, they help remove the barriers that slow down deployment and enable climate solutions to scale more quickly and effectively.

3. Powering the Functions That Usually Don’t Make Headlines

Some of the most pivotal contributors to industrial decarbonization are companies whose products and services rarely make the headlines – but without them, climate solution systems would not function effectively. These companies provide the foundational capabilities that make entire value chains operational, efficient, and reliable. Their contributions often fall into three key categories:

  • Scientific measurement and certification services: These companies supply the environmental measurement data needed to assess the viability of wind, solar, and other clean energy projects. Moreover, their third-party assessments are not just helpful – they are critical for obtaining regulatory approvals and securing project financing. Without them, many clean energy development projects could not get off the ground.
  • Manfacturers of advanced production equipment: These companies expand the range of viable commercial applications for climate-friendly materials. For example, companies engineering and supplying next-generation manufacturing systems for low-cost, high-volume production of carbon fiber composites enable aircraft manufacturers to replace heavier aluminum components, cutting emissions dramatically over each aircraft’s lifetime.
  • Grid infrastructure specialists: Companies that produce and install components like inverters, switchgears, specialty cables, charging stations, and transformers physically connect clean energy suppliers to end users. Take Germany’s “Südlink“ project: while a large utility leads the effort, it relies on a network of smaller companies to supply critical components and construct vast stretches of the transmission line consisting of towers and cables, which is urgently needed to deliver clean wind power from the North to the South.

For climate-focused investors and strategic decision-makers, the takeaway is clear: solely focusing on final products or headline-grabbing technologies risks overlooking critical enablers. Some of the most impactful players in the climate transition quietly operate in the industrial midcap space. They may not label themselves as “climate tech,” but their absence would immediately disrupt the systems they support. These companies offer outsized, system-level leverage for decarbonization at scale, amplifying the impact of every dollar spent further downstream. They are, quite literally, the invisible backbone of the climate economy.